Retail has changed! Has your enterprise? The retail landscape continues to evolve quickly, driven greatly by the information and options provided to consumers through the digital world (social media, e-commerce, mobility). • What does this new reality mean to traditional retail functions like merchandising, supply chain, store operations and marketing? • How are leading retailers adapting their organizations to overcome challenges and leverage opportunities? • What does the newly empowered consumer mean to your processes and goals? In this presentation, Kevin O’Marah, Senior Fellow at the Stanford Global Supply Chain Forum, along with Wayne Usie, SVP of Retail at JDA Software, discuss findings from Revolution Retail Industry Survey and highlight threats to traditional retail and learn how retailers are successfully driving change across the enterprise.

1. Organizing for Success with
Digital Retail

2. March 27, 2012 #JDAchat
Organizing For Success
With Digital Retail
Kevin O’Marah Wayne Usie
Senior Fellow SVP of Retail
Stanford Global JDA Software Group, Inc
Supply Chain Forum

3. Agenda
REVOLUTION RETAIL –
Organizational Considerations
1) Big changes to retail value chain
Stores, supply network, merchandising and brand
2) One organization for all channels
FACTORS 3) Converge or integrate processes
4) Leadership demands new talent
5) Transition by design and prepare
to adopt new metrics of success
Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

4. Projections – eCommerce
Near Term
JP Morgan Gartner
Global $963B by 2013 US $313B by 2015
19.4% CAGR 8.8% of total retail sales
US $235B by 2013 UK $86B by 2015
12.4% CAGR 23.6% of total retail sales
Euromonitor Forrester
Global 90% growth US $249B by 2014
between 2010-2014
$520B
Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

5. Stores and eCommerce
Percentage of Sales via eCommerce
3.00
2.50
Cars and Parts
2.00 Furniture +
Electronics +
Home Improvement
1.50
Grocery
Drug
1.00 Apparel
Sports+Media
0.50 Miscellaneous
0.00
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: US Bureau of Census, 2012 Statistical Abstract
Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

6. Non-Stores and eCommerce
Percentage of Sales via eCommerce
40.00
$117B
35.00
Cars and Parts
30.00
Furniture +
Electronics +
25.00
Home Improvement
20.00 Grocery
Drug
15.00 Apparel
Sports+Media
10.00
Miscellaneous
$4B Nonstore
5.00
$28B
0.00
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: US Bureau of Census, 2012 Statistical Abstract
Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

7. eCommerce Changes the
Physical Network for Retailers…
Buy online and pickup in store will be: Buy online and ship from store will be:
1
16 14
39
17
52
32
30
Essential Common Sometimes Rare or Not at all Essential Common Sometimes Rare or Not at all
N=115, data collected 12/2011
Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

8. …and the Role of Stores
Do you think the physical store in an eCommerce future will be:
4 8
15
More Important
Less Important
Same, but Different
Role
73
N=115, data collected 12/2011
Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

9. …While Offering New Possibilities
for Branding & Promotion
Brand Loyalty Demand Flexibility
29% 21%
39%
14%
32% 65%
Favors Retailer Favors Manufacturer
No Change More Receptive to Offers* Less Receptive to Offers* Unchanged
Product Choice, Price Point, Availability, Convenience are all
jointly delivered by the retailer and the manufacturer
Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

10. Marks & Spencer Leads the Way
“As well as acting as a distribution
centre for stores, the huge warehouse
will house the group's e-commerce
operation and will also be a base for its
international distribution business. It will
be one of the biggest buildings in the
East Midlands.”
Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

11. Fragmented Structures Will Struggle
Supply eCommerce
Chain Merchandising Ops Store Ops
Store Assortment 5% 64% 5% 15%
Store Fulfillment 54% 5% 8% 28%
Store-to-Store Transfers 37% 5% 5% 37%
Store Fulfill Online 16% 0% 16% 34%
In Store Kiosk Sales 5% 3% 8% 21%
Site-to-Site Transfers 46% 8% 5% 8%
eCommerce Assortment 5% 42% 30% 2%
eCommerce Fulfillment 42% 0% 25% 2%
Source: RSR Research, 2011
Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

12. Consider International Shipping…
Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

13. One Supply Chain Organization will
Support eCommerce and Stores
Do you expect retail organizations in an eCommerce future to have:
Overall Non-Food Large and Small Formats
Separate SC
Organizations 16%
19%
84%
Grocery
81%
50% 50%
N=102, data collected 03/2012
Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

14. Convergence or Integration a Must
As eCommerce grows do you expect the roles of supply chain, merchandising and
store operations to:
Overall
Converge
38%
Diverge
49%
Remain the Same
Integrate, but Remain
Separate
3% 10%
N=102, data collected 03/2012
Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

15. Multiple Talents Needed to Lead
If these three roles were to come under one head which is best suited to lead all
three?
Overall Grocery
Merchandising 16%
12%
Supply Chain 42%
Store
42%
Operations
36%
23%
Non-Food Large Format
19%
44%
37%
30%
N=102, data collected 03/2012
Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

16. Transition to the Future by Design
Do you believe the transition to omni-channel retail is best done:
Overall
“Integration is mandatory for
7% success across channels and needs
to filter down from the C level”
Holisitically with merchandising,
25% store ops and supply chain
developed as one strategy
Gradually with each developing
individually and at their own pace
Other
68%
N=102, data collected 03/2012
Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

17. Most are Prepared for the Change
As eCommerce grows from 5% of US sales to 15% do you have:
Overall
26%
31%
An 18 month strategy to respond
A 3 year strategy to respond
Both
Neither
28% 15%
N=102, data collected 03/2012
Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

18. New Metrics are a Chance to Change
Do you believe measurements of retail performance will:
Overall
25%
Remain based on same-store
44% sales growth
Change to same-shopper sales
growth
Develop new metrics not yet in
use
32%
N=102, data collected 03/2012
Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

19. Summary and Conclusions
REVOLUTION RETAIL –
Organizational Considerations
1) Expect to design a new value chain
- Stores, supply network, merchandising and brand
2) Build one organization across channels
to support this value chain
FACTORS 3) Integrate processes from source to sale
– think of consumer and shopper as one
4) Find leaders that understand both sales
and operations – learn to balance
5) Strategic planning is a must – new
metrics may catalyze new behavior
Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

20. Join the Conversation on Twitter
Connect with Us!
@JDASoftware
@waynejusie
@RTouchPoints
@komarah
JDA.com │info@jda.com │blog.jda.com
Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL

21. Organizing for Success with
Digital Retail